Deficit-Reduction Talks May Fuel Gas Tax Increase

The federal gas tax hasn't been increased since 1993 when it was used as a tool to reduce the federal deficit. Now faced with a similar situation, Congress may pay more attention to the idea.
by , | December 6, 2012

Leaders of the U.S. House Transportation and Infrastructure Committee will try to introduce a new surface transportation bill at the very onset of 2014, according to a committee aid who outlined the expected timeline of the legislation.

While the date may seem early considering President Barack Obama just signed the current surface transportation bill into law this summer, it's not. That's because the law, MAP-21, was a shorter-than-usual surface transportation bill and is set to expire Oct. 1, 2014.

The path toward MAP-21 was an arduous one, and the legislation was signed into law almost three years after its predecessor, SAFETEA-LU, expired in 2009.

The House transportation committee hopes to start drafting the legislation over the next 12 months while also aggressively overseeing implementation of the MAP-21 reforms. The plan is to introduce the legislation at the start of 2014, move it to the House floor by spring, and have it sent to the president's desk by summer 2014. This year, the highway and transit bill that came out of the House transportation committee never gained traction with the full House.

Governing has reached out to the U.S. Senate Environment and Public Works Committee to learn its timeline and is awaiting a response.

One of the hottest topics facing the next transportation bill will be revenue. The existing bill largely skirted the question and essentially used one-time accounting moves to find much of the money for the program. The reason it only lasts two years is because lawmakers struggled to find funding after that point.

Incoming House Transportation and Infrastructure Committee Chair U.S. Rep. Bill Shuster has made clear  that all revenue options are on the table, including the gas tax, a potential fee for miles traveled per vehicle and tying energy production to transportation funding.

The gas tax of 18.4 cents per gallon hasn't been increased since 1993; however, inflation and increasing fuel efficiency have significantly reduced the revenue that the tax can generate. It's a path that many observers say is unsustainable. Yet the idea of increasing the gas tax -- at least during the MAP-21 debate -- gained no traction.

As it stands now, a more conservative approach -- matching transportation spending to the revenue that the gas tax generates -- would result in a dramatic spending cut of more than 35 percent, according to some estimates. That is, of course, unless other revenue options are considered.

The committee aide did not explicitly endorse a gas tax increase but noted that it's a "unique time" for the country that could make it the best opportunity lawmakers have had in years to raise the gas tax.

There's been some speculation that the ongoing talks about federal deficit reduction could mean a potential gas tax increase is once again on the table because when the gas tax was last increased -- by 4.3 cents in 1993 -- the extra revenue was used to reduce the deficit. Then, in 1997, lawmakers redirected the 4.3 cent increase back to transportation spending.

If the gas tax is increased, some in the transportation community have pushed for it to send more money toward infrastructure projects. But in today's fiscal climate, the case for the gas tax might be more compelling in the context of deficit reduction. In 2010, for example, the Simpson-Bowles commission recommended a 15-cent gas tax hike.

The gas tax goes into the Highway Trust Fund, which is tapped for transportation spending. And when the Highway Trust Fund falls short of money , it's generally bailed out with general fund revenue. Increasing the gas tax could be seen as a fiscally responsible move since it would help avoid future bailouts with general fund money.

The committee aid speculated that over the next six to 18 months, there will be "robust" talks about the future of the gas tax as part of the larger conversation about deficit reduction. But it's unclear whether a hypothetical gas tax increase would even mean more money for transportation, or if it would simply strengthen the existing revenue stream and avert future bailouts of the Highway Trust Fund.

The aide declined to say whether Rep. Shuster would seek to increase transportation funding in MAP-21's successor legislation.

Still, whatever the circumstances, raising the gas tax would be a politically sensitive topic. Grover Norquist -- the Washington advocate who's the brains behind the no-new-taxes pledge signed by many members of Congress -- opposes such a move. There's also a policy case to be made against the idea: Raising the gas tax would delay the challenges facing the Highway Trust Fund, but it wouldn't necessarily overcome them since vehicles will presumably continue to become more fuel efficient as time goes on.

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